The Bank of Canada and the Monetary Authority of Singapore have successfully conducted a live experiment using digitized fiat currencies for cross-border payment, showcasing blockchain’s potential to facilitate faster and cheaper payments across national borders, according to a statement.

This is the first time that such a trial has ever been conducted between two central banks involving different sovereign currencies.

The Singaporean central bank MAS and its Canadian counterpart have been collaborating under their respective projects to use blockchain and digital fiat currencies to make payments cheaper, faster and safer.

“Cross-border payments today are often slow and costly,” said statement released on May 2 (Thursday). “They rely on a correspondent banking network that is subject to counterparty risk, inefficient liquidity management, and cumbersome reconciliation

The teams from the two central banks used a novel technique named Hashed Time-Locked Contracts (HTLC) (see here for information) to allow for payments without the need for a trusted third party.

The joint venture, known as Jasper-Ubin project3, was carried out in partnership with Accenture and J.P. Morgan, who supported the development of the Canadian network on Corda, and the Singapore network on Quorum, respectively.

Following the successful conclusion of the project, the Bank of Canada and MAS have jointly published a report titled “Jasper-Ubin Design Paper: Enabling Cross-Border High-Value Transfer Using Distributed Ledger Technologies” that proposes different design options for cross-border settlement systems.

“This represents opportunities for further collaboration among central banks, financial institutions and FinTech firms,” the statement said. “The Bank of Canada and MAS would like to encourage the global financial community to build on these findings and work together to make international payments better, faster and cheaper.”